ASU Responds to Allegations - KAIT Jonesboro, AR - Region 8 News, weather, sports

Jonesboro, AR -- Marsha Mays Reporting

ASU Responds to Allegations

JONESBORO, AR -- Arkansas State, along with many other major universities across the country is being investigated for the possibility that the school received kickbacks on student loans.

ASU is among 38 universities being scrutinized for documents dealing with a loan company that used team names, mascots and colors suggesting the company is the college's preferred lender. In exchange - the schools would receive some sort of payment.

New York Attorney General Andrew Cuomo wanted all records between the ASU Athletic Department and the Florida-based company known as University Financial Services. ASU searched their records and found no relations directly dealing with that company, but they did recall a sponsorship contract made with the Indian Club, a non-profit organization on campus that supports the ASU Athletic Program.

"When the Indian Club had a relationship with University Financial Services, they didn't see anything wrong," says Markham Howe, the Director of ASU's University Relations.

That is until the university asked them in February to cut off all ties with University Financial Services.

"They agreed to pay the Indian Club a sponsorship fee to have a presence on this campus. It was in the area of student privacy issues that we thought was most inappropriate of all," says Howe.

In exchange for that sponsorship they were paying to the Indian Club from August 2006 to February of this year, they wanted permission to place marketing materials around campus to advertise their company to ASU students. But it was another request that led ASU to ask the Indian Club to terminate the contract.

"Their agreement or what University Financial Services wanted was access to some of our list of students and we simply don't do that," says Howe.

Howe says it's his understanding that all student loans are only handled by the ASU Financial Aid Office and says that the university is well aware of the rules of recommending certain loan providers.

"We do not have a preferred provider. We do not recommend specific providers," says Howe.

And he says neither does the Indian Club, which he says makes the university confident that when the attorney general further investigates this contract, they will see that Arkansas State is in the clear.

"The Indian Club doesn't want to do anything to hurt this university. I am confident that neither ASU nor the Indian Club has done anything that was wrong," adds Howe.

ASU told us today that the Indian Club's contract agreement with the company was strictly a sponsorship. They provided us a copy of that contract and it does state in the agreement that University Financial Services will be the official student loan consolidation provider of Arkansas State University Athletics; one of the reasons New York's Attorney General is investigating this in further detail.

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